Scaling Will Fail With the Wrong Organization Structure

Scaling Will Fail With the Wrong Organization Structure

Facebook reorganized their management structure last week to address several issues that the current structure was failing to solve. Clearly the handing of user’s data was one of them. But they also rearranged the structure to separate new evolving technology platforms under the CTO Mike Schroepfer, keeping the existing product platforms of Instagram, WhatsApp, Messenger and Facebook app under Chris Cox the Chief Products Officer.

The organization structure of your business is unreasonably important as soon as there is a team people trying to fulfil their potential.

There is clearly no perfect structure, just one that’s right for you at any given point in your lifecycle. However, the following issues are worth reviewing to test whether you need to change the structure to a more appropriate and relevant one to execute your strategic plan. I’ve arranged it as a checklist (you know how I love my checklists) to make it easy to give your company a heath check.

Organisation Structure Checklist

  1. Is it time to address the “trusted lieutenants” issue? It requires an understanding of which employees have reached their limit. These are not bad people. In fact, the very opposite is often the case. They are dedicated employees who have been with you from the beginning. The problem is that because you trust them and they are reliable, you have pushed them beyond their capabilities. Their performance in their current role is weak and they are stressed because they know it, but they don’t want to let you down. Solutions will vary depending on the circumstances but include: leaving them in place but recruiting a manager above them to lead, leaving a role for them to fulfil that plays to their deep knowledge and skills, moving them to a different role completely with less leadership responsibilities but still playing to their strengths, or finally easing them out of the business with a fair and generous settlement.
  2. Is customer service deteriorating with the existing set up? Does your volume of business demand that you invest in a new customer support structure including people and technology? Do you have the right people in place? Is one person accountable for the performance of your customer experience?
  3. Do you have profit accountability for your business units or divisions? Is there a specific managing director, general manager, operational director in charge of delivering the profit target for the health division, the transportation division, the public sector division etc? We often see confusion and mystery over who is really accountable for the profit components of a business. There’s no problem with specialist group functions like HR or IT or Finance supporting a divisional team, but the Board needs to know as you scale, which person owns the profit performance. When manager’s own P&L responsibility, aligned to a strategic plan, they get to drive behavioral change. People need to be led.
  4. Are all staff members clear on who sets their agenda? Often as you scale, the stress of shared resources starts to show. It’s fine for a while, if the talented engineer is sharing her time with the Production Director and the Product Director, but ultimately you need to create unique roles with clarity of leadership, ie who is my boss?
  5. Are you confident that all your key employees are on message? Do they understand the big audacious goals of the company and how their role fits into it? The wrong organization structure will dilute down and obfuscate the CEO’s strategic objectives. Alignment of effort is a game changer. We constantly see talented employees working on the wrong stuff. This is a continuous process as you scale your business.
  6. Are you waiting too long to invest in people? Of course, leadership teams have to be cautious about investing in resources ahead of POs from customers. Fixed overheads should follow a step pattern. You hold on as long as you can with your current cost structure as your business scales. However, it’s a case of art over science in terms of deciding when to invest in the next round of senior roles. At The Portfolio Partnership we are seeing our highest demand from this issue. Bandwidth is stretched but leadership is wary of investing in a fully loaded C-Suite employee and instead is attracted to a fractional C-Suite partner solution with more know-how and relevant scaling experience than a specialist full time executive.
  7. Are you creating world class project managers in your business? Most major projects that move the dial, that fulfil strategic objectives and drive the business forward require multi-departmental cooperation. They require a strong project manager. This role can be fulfilled by a dedicated Special Project Manager or by a department head with strong leadership skills. Examples include, a CTO driving the implementation of a new management information system with the support of senior managers from finance, sales, marketing, production and customer support. Too many organizations are trying to scale without defining special project teams to solve problems
  8. Does your structure allow the customer’s voice to be heard? We are not saying that the customer gets to decide what your product road map should be or fundamentally the direction of your strategy. But we do see organization structures that prevent clear feedback from the customer. Through strong product management and product marketing teams, collaborating with sales and customer support staff, you can make it easy for the leadership team to hear the signals from the market. Ignoring these signals is never a great idea. Bends in the road happen at breakneck speed within most industries these days. You need to have a set up that maximizes your chance of anticipating where the market is going.
  9. Does your structure seem to value fiefdoms of meaningless power, or does it value relationships within and between departments, to get stuff done? Actions speak louder than words. Promote and encourage managers with deep curiosity, high energy and collaborators who focus on performance.

Reach out at Ian@TPPBoston.com for more information on our tools for creating an organization built around these principles.

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